- 10 Marks
Question
A lawyer plans to save a certain amount of money Nx per annum for 5 years on the first day of the year. If the interest rate is 8%, for him to receive N696,910.50, determine x. (10 Marks)
Answer
a. This is an Annuity due situation i.e payments are made in advance i.e at the
beginning of each payment period. The relevant formula is
where Sn = final cash to be received at the end of the period,
Substituting gives
Therefore, the money saved by the lawyer = N110,000
- Tags: Annuity, Interest Rate, Present Value, Savings
- Level: Level 1
- Topic: Mathematics
- Series: MAY 2017
- Uploader: Kwame Aikins